Layer-2 Networks Could Be Ethereum’s Ticket to a Major Price Rally

The conversation surrounding the effect of Ethereum's layer-2 networks on the revenue generated by the Ethereum mainnet has been ongoing, with Sygnum Bank weighing in on the matter.

According to Katalin Tischhauser, the bank’s head of research, it remains premature to determine whether these layer-2 solutions will negatively impact mainnet revenue or impede its price growth.

Tischhauser acknowledged that layer-2 networks might naturally divert some activity away from the mainnet. However, she emphasized that the scalability these solutions offer could facilitate new transaction types and open up previously untapped revenue streams for Ethereum. She stated,

It’s too early to conclude if layer-2 networks will diminish mainnet revenue or contribute to its growth. While it’s likely that the mainnet will lose some revenue share to layer-2s, these innovations could allow the Ethereum mainnet to earn income in ways that were not previously feasible.

Additionally, Tischhauser pointed out that the decline in revenue has affected market sentiment regarding Ethereum, which is reflected in its underwhelming performance compared to Bitcoin.

On a similar note, Henrik Andersson, the Chief Investment Officer at Apollo Capital, shared his insights on the influence of layer-2 networks on Ethereum’s standing. He argued that these networks play a vital role in preserving Ethereum’s dominance among layer-1 blockchains by discouraging users from switching to other platforms.

Andersson believes that Ethereum’s layer-2 networks are set to fuel long-term revenue growth by increasing transaction volumes and attracting institutional investors, which could help Ethereum reclaim its market share. He recently forecasted that the price disparity between Ethereum and Bitcoin could diminish, suggesting that ETH might reach a new all-time high by early 2025 or shortly thereafter.